Algonquin SNG, Inc. v. Federal Energy Administration

COMMONWEALTH OF MASSACHUSETTS et al., | Plaintiffs, | | Civil Action v. | No. 75-0129 WILLIAM E. SIMON et al., | FILED Defendants. | Feb. 21, 1975

ALGONQUIN SNG, INC. et al., | James F. Davey, Plaintiffs. | Clerk | Civil Action v. | No. 75-0130 WILLIAM E. SIMON et al. | Defendants. | The two consolidated cases were brought by several northeastern states and their governors and several utilities against the Secretary of the Treasury and the Administrator of the Federal Energy Administration. In addition, the State of Minnesota has been granted leave to intervene. These suits challenge on various statutory and constitutional grounds Proclamation No. 4341 issued by the President on January 23, 1975. This Proclamation, among other things, imposes a supplemental¹license fee on the importation of oil and certain petroleum products into the United States.

The thrust of the two complaints rests on several underpinnings:

(1) The Proclamation 4341 issued by the President pursuant to Section 232(b) of the Trade Expansion Act,19 U.S.C. § 1862(b) is an unconstitutional delegation by Congress of legislative power;

(2) The statutory provisions relied upon, even if constitutional, do not give the authority to enact this particular program or plan;

(3) In taking the action he did, pursuant to Section 232(b) the President did not meet the procedural requirements set forth in the statute; and

(4) The program is being implemented without compliance with the requirements of National Environmental Policy Act,42 U.S.C. § 4331et seq.in that an EIS should have been prepared before action was taken.

There are other subsidiary grounds but the ones just recited appear to be the more important.

The case has come before the Court on plaintiffs' motions for a preliminary injunction which would restrain defendants from imposingPage 1065the requirement of an import license subject to the payment of a fee as provided for in Proclamation 4341.

Secondly, defendants oppose the granting of the relief sought on the grounds that plaintiffs cannot meet the criteria for granting a preliminary injunction. More specifically, defendants contend that the relief sought is barred by the Anti-Injunction Act,26 U.S.C. § 7421, that the President's action is in accord with constitutional and statutory requirements and that the public interest would be seriously affected by even a brief delay in the implementation of the President's program. So much for a brief description of the contentions of the parties and the present posture of the litigation.

Memoranda of points and authorities of great length together with hundreds of pages of supporting affidavits, have been filed in support of the respective positions as well as two supplemental submissions requested by the Court on the possible issue that this controversy is a "political question" which the doctrine of separation of powers as well as prudence and good sense would cause us to avoid. These, in addition to the arguments of counsel, have been most helpful.

Since plaintiffs have conceded that the President's determination that his program is required in the interests of national security is a finding which is not subject to judicial review, it appears that objections to our jurisdiction on "political question" grounds have been obviated and that the case is ready for disposition.

By way of a brief summary of the historical background, it is common knowledge that foreign oil importations have been a serious problem for many years. In 1959, President Eisenhower in Proclamation 3729 set up a Mandatory Oil Import Program which established a system of oil import quotas, the reason being that foreign oil was being imported in such large quantities and at such low prices as to threaten the development of the domestic petroleum industry. The use of quotas was continued with several amendments from time to time, when President Nixon issued Proclamation 4210 on April 18, 1973, which eliminated the quota restrictions on oil imports, permitted importations up to the previous quota on a fee free basis, and substituted a fee system for all importations in excess of old quota levels. Because of rapidly increasing domestic demand for oil, U.S. domestic production was not keeping pace; greater levels of imports but at a slightly higher cost were permitted under this Proclamation.

The basic seriousness of this problem became indelibly underlined as a result of the embargo of last winter which caused a sharp drop in our gross national product, threw a half million persons out of work, increased the cost of foreign oil from $3 billion in 1970 to $24 billion in 1974, thereby contributing to our unfavorable balance of trade and triggering the price inflation which, along with rising unemployment, is perhaps the most important problem facing the leadership of this country. The grave necessity of decreasing ourPage 1066dependence on foreign oil, and developing our own domestic industry and alternative sources of energy was and is a matter of primary national importance. This set of conditions provides the background for the President's action in issuing Proclamation 4341 on January 23, 1975. He acted in response to a report submitted to him on January 14, 1975 by Secretary Simon. In this report purportedly made pursuant to Section 232 of the Trade Expansion Act of 1962, as amended, and resulting from an investigation under that section, the Secretary found in substance that foreign oil was being imported into the U.S. in such quantities and under such circumstances as to threaten to impair the national security. On the basis of this finding, the Secretary recommended to the President "that appropriate action be taken to reduce imports." The President, accepting the Secretary's report, finding and recommendation, issued the Proclamation. It is stated to be an important part of the President's energy program, consisting of several elements, which admittedly will increase energy costs over the whole country. The New England states will be hardest hit because oil supplies 86% of the energy needs of that region as contrasted with 46% for the country as a whole. The affidavits on behalf of the several states confirm the particularly serious impact which the measure will have on them.

In acting as he did, the President took action "toadjust the importsof such article and its derivatives so that such imports will not so threaten to impair the national security."19 U.S.C. § 1862(b). The license fee system was the device he used.

It is necessary to identify as best we can the precise category into which this program falls. If it is a tariff or duty as plaintiffs might, but expressly do not, contend, jurisdiction to hear this case would lie in the Customs Court under28 U.S.C. § 1582. The Customs Court could provide no relief because it lacks equity jurisdiction and these suits seek injunctive relief. If it is a tax, the delegation of which power by Congress is improper, the plaintiffs are met with the Anti-Injunction Act which, except for certain limited exceptions, is a bar to suits for the purpose of restraining the assessment or collection of a tax.26 U.S.C. § 7421(a).

It is our judgment that the license fee program is one of a number of possible actions covered in the non-defined phrase "to adjust imports" contained in Section 232(b) and that the program including the fee is a regulatory measure enacted for the protection of national security. Certainly, if the term includes quotas and even a complete embargo, as plaintiffs admit, it can responsibly be interpreted to include imports subject to fees, however steep. The statements of Senators Milliken and Bennett, the former quoted in both memoranda, indicate that the President was given a broad panoply of powers in Section 232. As such, we believe our jurisdiction to decide the validity of the fee is predicated on28 U.S.C. §§ 1331or1340.

Passing to the specific objections, plaintiffs contend at the outset that Section 232 is an undue delegation of legislative authority. APage 1067corollary to this argument is that the delegation lacks adequate standards, and, if upheld, would confer unbridled discretion on the President. We have heard and been impressed with Mr. Connole's argument that delegations of power by the Congress to the President to adjust tariffs have always been accompanied by rather strict limitations and conditions. However, we disagree with his conclusion that this delegation particularly is defective. The non-delegation doctrine is almost a complete failure. As Professor Davis has put it:

"Lawyers who try to win cases by arguing that delegations are unconstitutional almost invariably do more harm than good to their clients' interests." Davis —Administrative Law Treatise,Vol. 1, § 2.01 p. 75 (1958).

The vaguest of standards have been held adequate and various delegations without any standards have been upheld.United States v. Southwestern CableCo.,392 U.S. 157,88 S.Ct. 1994,20 L.Ed.2d 1001(1968);Arizona v.California,373 U.S. 546,833 S.Ct. 1468,10 L.Ed.2d 542(1963).PanamaRefining Co. v. Ryan,293 U.S. 388,55 S.Ct. 241,79 L.Ed. 446(1935) andA.L. A. Schechter Poultry Corp. v. United States,295 U.S. 495,55 S.Ct. 837,79 L.Ed. 1570(1935), the only two cases in American history holding invalid congressional delegations of authority, are now 40 years old and have been consistently undermined. Furthermore, Section 232 provides certain standards, even though general and somewhat imprecise. The President can only act when imports "threaten to impair the national security" and the section sets forth in detail a number of factors which the President must consider when acting pursuant to Section 232. In the tariff analogy previously referred to, it is not there required that a prior determination of the actual impairment to the national security be made before the President exercised the tariff powers delegated to him. Accordingly, we hold that Section 232 is a valid delegation of authority by Congress to the President and confers upon him the power to impose import license fees on oil imports once he determines the fact of threatened impairment of the national security.

Next, plaintiffs charge that, even if a valid delegation of authority, the President in promulgating Proclamation 4341 did not meet the procedural requirements of the statute. The procedural conditions set forth in Section 232(b) consist of five separate steps:

(1) The Secretary of the Treasury must undertake an appropriate investigation. While the chronological time was only 10 days (January 4 to January 14, 1975), it must be recalled that since January, 1973, this particular individual, Mr. Simon, had been living with this problem and was deeply involved in the formulation of oil import policy, first as chairman of the Oil Import Policy Committee, then as Administrator of the Federal Energy Commission, and finally as Secretary of the Treasury.

(2) In addition to appointing David Macdonald, Assistant Secretary of the Treasury for Enforcement, Operations and Tariff, to conductPage 1068the investigation, consultation was had with numerous high officials of departments and agencies to determine the effects on national security. Extensive affidavits from these gentlemen are a part of the record.

(3) Secretary Simon on January 14, 1975, made a report of his findings and recommendation for action within one year after beginning his investigation. Having concluded that the continued level of importations threatened to impair the national security,

(4) he advised the President,

(5) who agreed with the Secretary's findings and recommendation, and took the action he deemed necessary to adjust imports "so that such imports will not so threaten to impair the national security."

It is perfectly true, as Mr. Bellotti has noted, the relative speed of this entire process may auger against its thoroughness and completeness. However, this ignores the fact that the problem of our dependence on foreign oil has been with us for months and years, has been extensively debated in and out of government, and that the President's finding of national security implications was but a restatement of what all knowledgeable people knew to be the fact.

It is also recognized that the statute by recent amendment provides for the holding of a public hearing "if it is appropriate." The Secretary in his discretion decided it was not appropriate to hold public hearings and, in view of the importance of prompt action in what the President, in effect, found to be an emergency, we will not question his exercise of discretion. There is no constitutional or statutory right to a hearing. The procedural steps in our judgment were all taken.

Finally, plaintiffs allege that defendants violated the National Environmental Policy Act,42 U.S.C. § 4321et seq.by failing to prepare an EIS before implementing the Proclamation.

Defendants concede their duty to comply with Section 102(2)(C) of NEPA, but argue that the Act does not, under all circumstances, require an environmental impact statement before the implementation of the government action. Defendants argue that when, as here, the government action is in response to an emergency or for reasons of national security, strict compliance with the procedural requirements of NEPA is not mandated. This is especially true, defendants argue, when the initial environmental assessment discloses no short term environmental impact. Defendants therefore maintain that, for the present, the abbreviated environmental report issued January 21, 1975, will suffice. An environmental impact statement will be published May 15.

The case law is clear that NEPA must be complied with to the fullest extent possible, unless there is a clear conflict with a statutory duty or some other impediment that makes full compliance excusable. If defendants can show that drafting an impact statement will prevent its performance in meeting an emergency situation, then it will be excused from strict compliance.Calvert Cliffs' Coordinating Committee v. A. E. C.,146 U.S.App.D.C. 33,449 F.2d 1109(1971).

Defendants' reasons for not complying with NEPA involve considerations of national security. When he issued the Proclamation onPage 1069January 23, the President stated: "Whereas, I find and declare that adjustments must be made in imports of crude oil . . . so that such imports will not so threaten to impair the national security." The President went on to state: "Whereas, I judge it necessary and consistent with the national security to further discourage importation . . ."

In addition, as the affidavits of Mr. Woodcock, Associate Assistant Administrator of FEA for Environment Programs, and Russell Paterson, Chairman of Council on Environmental Quality, show (1) the filing of a preliminary report analyzing the potential short and long term environmental imports of the revised oil import program [sic]. This was made public the day Proclamation 4341 was issued. And (2) the commencement of a full EIS to be filed on May 15, 1975 [sic].

Under all the circumstances, we conclude that full compliance with the EIS requirements of NEPA will take place in the near future and that to have delayed issuance of the President's Proclamation until an EIS has been filed would not have been justified in view of the emergency nature of the problem and the need for prompt action.

Finally, turning to the relief requested, namely a preliminary injunction, it is recognized that our jurisdiction to grant equitable relief is limited and is subject to certain criteria. They are:

(1) A strong showing by petitioner that it is likely to prevail on the merits;

(2) Irreparable injury;

(3) Possibility of harm to others interested in the proceeding;

(4) The public interest.

The Court has at all times recognized the irreparable injury to plaintiffs, both the states and the private utility companies. The record is silent on possible injury to others interested in this proceeding and we will therefore assume that there is no such injury or possibility which should otherwise militate against the grant of injunctive relief.

However, it is our judgment that plaintiffs have not made a strong showing that it is likely that they will prevail on the merits. Further, we must accept the President's determination of national security upon which his action was predicated. Certainly, our continued dependence on imports of foreign oil threatens our national security, the economy, the posture of our defense and the conduct of our foreign affairs. We cannot, predict or pass upon the effectiveness of the Presidential program. We must accept it as it is and hold that any interference by way of injunctive relief would be inconsistent with the public interest.

Accordingly, it is by the Court this 21st day of February, 1975,

Ordered, that plaintiffs' motions for preliminary injunctions be and they are hereby denied.

The foregoing constitutes the Court's Findings of Fact and Conclusions of Law pursuant to Rule 52(a) of F.R.Civ.P.

(s) J.H. Pratt ___________________________________

John H. Pratt United States District Judge